AUD/USD climbs to highest level since December 2018 near 0.7350
- AUD/USD is up more than 1% on a daily basis on Friday.
- Bearish pressure surrounding USD remains intact ahead of key US data.
- Personal Income in US is expected to decline by 0.2% in July.
After climbing toward 0.7300 on Thursday, the AUD/USD pair retreated modestly but closed in the positive territory at 0.7258. With the heavy selling pressure surrounding the USD remaining intact on Friday, the pair extended its rally and touched its highest level since December 2018 at 0.7348. As of writing, AUD/USD was up 1.15% on a daily basis at 0.7341.
Fed's new policy strategy weighs on USD
The FOMC's new monetary policy strategy seems to be causing the USD to weaken against its rivals. In his speech at the Jackson Hole Symposium on Thursday, FOMC Chairman Jerome Powell revealed that the Fed will target average inflation. This development delivered a clear message to the markets that the Fed will not even thin about tightening its policy even if inflation rises above 2%.
Commenting on this announcement's impact on the greenback, "unless risk aversion escalates markedly – and something truly dramatic would have to happen to cause the markets to panic given their impressive resilience to growing tensions between the US and China – the dollar is likely to remain soft," Rabobank analysts said.
At the moment, the US Dollar Index is down 0.8% on the day at 92.25. Later in the session, the US Bureau of Economic Analysis will release the Personal Income, which is expected to decline by 0.2% in July, and Personal Spending data. Additionally, the Personal Consumption Expenditures Price Index, the Fed's preferred gauge of inflation, will be looked upon for fresh impetus.
Technical levels to watch for